Author: Liang Yu
Editor: Zhao Yidan
At the Hong Kong Convention and Exhibition Centre, as global fintech elites gather for Fintech Week and discuss the digital future, the Hong Kong Securities and Futures Commission quietly announced two milestone circulars. This move, launched at Asia's largest fintech event, marks a fundamental shift in Hong Kong's virtual asset regulatory philosophy: from a past focus on risk prevention as "defense" to a complete transition towards a "proactive" approach led by rules to foster development.
The new regulations no longer merely "set limits," but actively "build bridges," paving the way for institutions to participate in virtual asset activities compliantly; they not only "block risks" but also aim to "facilitate innovation," bringing gray areas into a transparent regulatory framework. On this day, Hong Kong, with what the industry calls a "dual-engine" regulatory policy, clearly chose a path that is distinctly different from the tightening regulations seen in some global markets, declaring its virtual asset regulation has officially shifted from "gatekeeper" to "enabler."
On November 3, 2025, when "Hong Kong Fintech Week × StartmeupHK Festival 2025" kicked off at the Hong Kong Convention and Exhibition Centre, the Hong Kong Securities and Futures Commission (SFC) simultaneously released two important circulars that could reshape the regional and even global digital asset landscape. These two documents, titled "Circular on Expanding Products and Services of Virtual Asset Trading Platforms" and "Circular on Sharing Liquidity of Virtual Asset Trading Platforms," were released during Hong Kong's most significant fintech event, and the timing was certainly not coincidental.
According to a press release from the Hong Kong SAR government, this year's event attracted over 37,000 participants from more than 100 economies, and the SFC's decision to release policy signals at this globally watched moment reflects Hong Kong's strategic determination to position virtual assets as a crucial lever to consolidate its status as an international financial center.
I. The Rise of Hong Kong Fintech and Strategic Ambition
According to the Hong Kong SAR government's press release, this year's Hong Kong Fintech Week attracted over 37,000 participants from more than 100 economies, setting a historical record. Chief Executive John Lee announced in his opening speech that Hong Kong ranks third in the "Global Financial Centers Index" and first in Asia, currently hosting over 1,200 fintech companies, a 10% increase from last year.
Behind this number is Hong Kong's strategic emphasis on the fintech sector. John Lee further revealed that by 2032, the total revenue of Hong Kong's fintech industry is expected to exceed $600 billion, with an annual growth rate of over 28%. This data comes from predictions made by the Hong Kong SAR government in collaboration with fintech industry research institutions, indicating an optimistic official outlook on the industry's prospects.
Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue announced a more ambitious "Fintech 2030" vision during the event, focusing on four key areas, including building a new generation of data and payment infrastructure and supporting the comprehensive application of artificial intelligence in the industry. According to the HKMA's official release, this vision encompasses over 40 specific projects, providing a clear roadmap for the development of fintech in Hong Kong.
From a global perspective, Hong Kong is building its advantages through differentiated positioning compared to competitors like Singapore and Dubai. In contrast to Singapore's "regulatory sandbox + institutional guidance" approach, Hong Kong has chosen a more aggressive development model centered on "licensing, leveraging liquidity, and tokenization," a judgment based on comparative analysis of regulatory policies in both regions.
II. Regulatory Evolution: From Closed Ecosystem to Global Connectivity
The SFC's regulation of virtual assets has undergone a significant evolution. Looking back at this process, we can clearly see a path from strict control to orderly opening.
In 2018, the SFC first released a regulatory framework for virtual assets, adopting a relatively cautious stance. In October 2022, Hong Kong released a policy declaration on the development of virtual assets, marking a shift in the official attitude. By June 2023, the SFC officially issued licenses to virtual asset trading platforms, allowing them to provide services to retail investors, a move seen by the market as an important signal of openness.
The dual circulars released on November 3, 2025, represent a new phase in Hong Kong's virtual asset regulation. SFC Chief Executive Ashley Alder pointed out at a forum during Fintech Week that Hong Kong is gradually evolving from an initially closed ecosystem focused on protecting investors and centered around licensed virtual asset trading platforms to "a crucial stage of connecting the local market with global liquidity."
The regulatory logic behind this transformation is shifting from "gatekeeping" to "empowerment." Analyzing the content of the circulars reveals that the SFC is no longer satisfied with merely preventing risks but is actively creating business development space for market participants while maintaining market stability through more refined regulatory tools.
Compared to the Monetary Authority of Singapore (MAS), Hong Kong has chosen a more expansive path. Singapore primarily relies on regulatory sandboxes and institutional guidance to develop its virtual asset market, while Hong Kong aims to integrate licensing systems with global liquidity, attempting to enhance market vitality while ensuring regulatory effectiveness.
III. Product Expansion Circular: Unlocking the Potential of the Tokenized Economy
The core of the "Circular on Expanding Products and Services of Virtual Asset Trading Platforms" lies in breaking down product barriers and expanding business boundaries. This circular includes three major reforms, each addressing key pain points in the current market.
The first reform is to relax the regulations on token inclusion. For virtual assets sold to professional investors, including stablecoins, the requirement for a 12-month track record has been removed. Stablecoins issued by licensed stablecoin issuers are also exempt from this limit and can be sold to retail investors. This policy change significantly lowers the listing threshold for emerging tokens, allowing platforms to respond more quickly to market changes.
The second reform explicitly allows platforms to distribute digital asset-related products and tokenized securities. Licensed platforms can distribute investment products related to digital assets, including tokenized securities, provided they comply with existing regulations, and can open trust or client accounts for customers holding related assets. This means that platforms are no longer just trading venues but can transform into comprehensive financial service providers.
The third reform allows platforms to provide custody services for digital assets that are not traded on their platforms. Platforms can use affiliated entities to custody digital assets that are not listed for trading, but must comply with strict due diligence and risk control requirements. This regulation expands the revenue sources for platforms and provides users with a more comprehensive asset management solution.
These reforms align closely with the HKMA's strategy to promote the tokenization of real-world assets (RWA). Reviewing the HKMA's recent initiatives, including the issuance of tokenized green bonds and the exploration of tokenization for foreign exchange fund notes and bonds, it is evident that Hong Kong is attempting to position RWA as the "most practically applicable" segment within its virtual asset regulatory framework.
IV. Liquidity Sharing Circular: Building a Global Liquidity Pool
The "Circular on Sharing Liquidity of Virtual Asset Trading Platforms" represents a significant innovation in Hong Kong's virtual asset market infrastructure. The core of this mechanism is to allow licensed platforms to integrate order books with their overseas affiliated platforms, forming a shared liquidity pool.
According to the circular, the shared liquidity mechanism must meet four key conditions. The partners must be compliant overseas platforms, and the jurisdiction must have a regulatory framework that aligns with international standards; a settlement mechanism for cash and securities must be established, along with a reserve fund to address settlement risks, and real-time monitoring must be implemented.
A unified market surveillance plan must be established to prevent misconduct in cross-border markets; platforms must assume full trading responsibility and fully disclose relevant risks to customers. These regulations encourage platforms to enhance trading depth and efficiency through liquidity sharing while emphasizing the importance of risk isolation and investor protection.
Ashley Alder explained this mechanism by stating, "This arrangement allows licensed platforms to share a single order book with affiliated overseas platforms, enabling local investors to utilize global liquidity while attracting this liquidity to the Hong Kong virtual asset market."
From a global competitive perspective, Hong Kong's liquidity sharing mechanism differs from the single jurisdiction model of the Dubai Virtual Assets Regulatory Authority (VARA) and the relatively conservative strategy of the UK's Financial Conduct Authority (FCA), reflecting Hong Kong's strategic intent to enhance its institutional attractiveness by "feeding local markets with global liquidity."
The SFC also plans to study allowing licensed brokers to route client orders to group overseas regulated liquidity pools, which will further enhance Hong Kong's global connectivity.
V. Technology Empowerment: AI and Tokenization Building New Infrastructure
During the various activities of Fintech Week, artificial intelligence and tokenization emerged as the two most prominent technological trends, closely aligning with the implementation of the dual circulars.
Hong Kong SAR Financial Secretary Paul Chan stated that as an important part of Hong Kong's "AI+" strategy, the SAR government is promoting artificial intelligence across various fields and encouraging cross-sector collaboration in AI to help upgrade the fintech industry. This statement resonates with the dual circulars' requirements for technological regulation.
HKMA Chief Executive Eddie Yue further elaborated on the application planning of AI in the financial sector. According to the HKMA's official announcement, the authority will launch a new "AI2" strategy to further promote the comprehensive and responsible application of artificial intelligence in the financial industry in Hong Kong and other regions. The HKMA will collaborate with the industry to build a shareable and scalable AI infrastructure and specialized models for the financial sector.
In terms of tokenization, the HKMA will further advance the tokenization of real-world assets, including financial assets. The HKMA will take the lead in demonstrating asset tokenization, such as regularizing the issuance of tokenized government bonds while exploring the feasibility of tokenizing foreign exchange fund notes and bonds. These initiatives align with the provisions regarding tokenized securities in the SFC's product expansion circular.
Eddie Yue emphasized, "Data is the lifeblood of the digital economy, AI is the engine, resilience is the safety net, and tokenization is the channel. These elements will develop in synergy to build a smarter, more inclusive, more efficient, and safer financial ecosystem in Hong Kong."
From a technological infrastructure perspective, Hong Kong is building a technical architecture that supports the entire lifecycle of digital assets, covering asset issuance, trading, clearing, and custody, while the dual circulars provide regulatory compliance assurance for this architecture.
VI. Cross-Border Collaboration: From Financial Center to Digital Finance Hub
Cross-border financial cooperation and connectivity is another important topic of this year's Fintech Week, closely related to the liquidity sharing mechanism.
People's Bank of China Vice Governor Lu Lei stated at the opening ceremony that Hong Kong is an international financial center and an international innovation technology center, and the Guangdong-Hong Kong-Macao Greater Bay Area is the most open, economically vibrant, and competitive world-class city cluster in China, possessing unique advantages in developing fintech.
Lu Lei revealed key future work in cross-border payment services, including "continuously expanding the Renminbi cross-border payment system's business in Hong Kong" and actively promoting the interconnection of rapid payment systems between the two regions. Recently, the People's Bank of China organized the establishment of a unified gateway for cross-border QR code payments, serving as a unified interface for conducting cross-border QR code payment cooperation, further facilitating cross-border QR code payment collaboration between institutions in both regions.
These measures will strengthen Hong Kong's position as a hub for the internationalization of the Renminbi. John Lee pointed out that Hong Kong is the world's largest offshore Renminbi trading center, and the SAR government will continue to support the Renminbi's greater role in Hong Kong's economy. This positioning aligns strategically with the cross-border trading characteristics of virtual assets.
Hong Kong Invest Hong Kong Director General Stephen Wong stated that this year's event welcomed over 30 delegations from international and mainland China, exploring more "going out" opportunities through Hong Kong. There were also delegations from traditional markets in Western Europe and the United States, as well as emerging markets in the Gulf Cooperation Council region, ASEAN, and Central and Eastern Europe, hoping to seize the growth potential in Asia.
From a regional collaboration perspective, Hong Kong is positioning itself as a bridge connecting mainland China with the global digital asset market through policy innovations like the dual circulars, a strategy that is expected to create a unique competitive advantage in the Asian region.
VII. Market Impact and Industry Restructuring
The two circulars issued by the SFC are expected to have a profound impact on the structure of the virtual asset market, driving the industry from simple trading services to comprehensive digital financial services.
The liquidity sharing mechanism will significantly enhance market efficiency. By integrating trading orders into a shared order book with affiliated overseas platforms, Hong Kong investors can enjoy deeper liquidity and more competitive quotes. This mechanism is particularly beneficial in narrowing the gap in trading depth between Hong Kong and global mainstream trading platforms.
The product expansion measures will bring new business growth points for platforms. Platforms can sell virtual assets without a 12-month performance record to professional investors, as well as stablecoins licensed by the HKMA, tokenized securities, and digital asset investment products. Affiliated entities of the platforms can also provide custody services for virtual assets and tokenized securities that are not traded on the platform.
These changes will prompt market participants to reposition their roles. Large platforms may leverage policy benefits to transform into comprehensive financial service providers, while small and medium-sized platforms will need to seek niche markets, such as focusing on specific types of tokenized assets or providing specialized custody services.
SFC Executive Committee member Yip Chi-hang pointed out during a related discussion that Hong Kong needs to "further establish financial infrastructure and artificial intelligence facilities, manage multiple risks, and work harder to build a basic safety net for digital asset categories, while collaborating with global regulators to ensure that arbitrage activities do not occur during the flow conversion."
From the perspective of the global digital asset competitive landscape, Hong Kong has achieved a regulatory framework upgrade through the dual circulars, enhancing its institutional advantages in competition with rivals like Singapore and Dubai, and is expected to attract more global capital and professional talent.
VIII. Future Outlook: A New Era of Digital Finance in Hong Kong
With the implementation of various new policies, the prospects for the development of digital finance in Hong Kong are attracting attention. From the dimensions of regulatory trends, technological evolution, and market transformation, we can outline the future landscape of Hong Kong's virtual asset market.
In terms of regulation, the SFC is likely to continue advancing regulatory innovation along the path of "precise development." In the future, more categories of digital assets, such as DeFi protocols and NFT securitization products, may gradually come under regulatory oversight. At the same time, cross-border regulatory cooperation will be promoted, establishing multilateral mutual recognition mechanisms to enhance international collaboration efficiency.
On the technological front, the HKMA's "Fintech 2030" vision will gradually be implemented. The four key areas of building a new generation of data and payment infrastructure, supporting the comprehensive application of artificial intelligence in the industry, strengthening business and technological resilience, and promoting financial tokenization will be comprehensively advanced.
In terms of market transformation, the dual circulars will drive the Hong Kong virtual asset market from a "trading venue" to a "digital asset hub." The enhancement of product and service capabilities will attract more institutions and retail investors to participate, expanding the market size; liquidity integration will accelerate the differentiation between platforms, with those possessing technological and risk control advantages standing out.
Hong Kong Fintech Week showcased the vitality of Hong Kong as an international fintech center, while the release of the dual circulars reflects Hong Kong's innovative courage in the field of digital asset regulation. From the global development history of virtual assets, Hong Kong is attempting to carve out a unique path that promotes innovation while preventing risks.
With the advancement of "Fintech 2030" and the implementation of new virtual asset regulations, Hong Kong is building a more innovative, inclusive, and resilient fintech ecosystem. In the coming years, as more tokenized products are listed for trading, AI financial models are put into use, and cross-border payment networks become interconnected, Hong Kong is expected to continue its glory as an international financial center in the digital finance era.
Sources of some information:
· "What Did the Hong Kong SFC Say in Its Two Circulars, and What Are the Impacts?"
· "Opening of Hong Kong Fintech Week"
· "Hong Kong SFC: Licensed Virtual Asset Trading Platforms Allowed to Share Order Books with Affiliated Overseas Platforms"
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